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2008 Economic Crisis
A sub-category dedicated to the economic crisis that has affected us all
810 Questions
Depends on how long were going to sit here and watch it happen and not do anything about it.
What is the expected inflation rate for 2010?
There is no official predicted rate of inflation for 2009. Official inflation statistics do not go that far into the future, but you could probably find estimates on various economic magazines such as the Wall Street Journal, IBD, or The Economist.
A recession is a term used to signify two consecutive quarters (6 months) of decline in the nations GDP. This recession is expected to last for atleast another 2 quarters. By the 3rd quarter of 2009 things are expected to be back to normal.
Let us hope for the best.
Are the republicans to blame for the stock market crash of 2008?
hopefully I can help... The stock market woes go well beyond the demonized figure of the GOP that has been characterized over the last few years.
1. The fall has seen it's hits that included a stressed American deficit due to funds that once topped over $50 million spent per week in Iraq (that's more than what is spent on cancer research in a single year).
2. Rising gas prices due to oil speculation and the inability of the US to avoid the heavy handed rule of OPEC by becoming more energy independent played a huge role in slowing our pockets.
3. The real estate market had a bubble that burst and sprayed most of the American dream. Unfortunately, most of us WERE living within our means but the other portion of Americans that were either negligent, overoptimistic, or gullible.
4. Real estate markets, of course, put a shotgun effect through our "strong" fundamentals, taking out banks and credit industries along the way who failed to have anyone check up on just what the Hell was happening in the real estate biz. Call it the worst presidency efficiency to date but sadly, the Congress and Senate, backed by the all supreme Nancy Pelosi had their own approval rating of around 14% (ataway to suck at your job, government paid officials!). The best plan in DC at the time was to blame the other guy even though Barney Frank and his CEO lover were right at ground zero when this real estate bomb went off, and likely could have credited the few who did warn us on the matter before it hit.
5. Millions of other cogs were at work as well: Hurricane Ike reminded wall street of the inescapable flood damage to come. Grass and forest fires off and on in one of the most economically bewildered states in America -not to mention overtaxed and overpriced- led by Arnold the great was disheartening as well. Basically, If you walk down Wall Street and cough the wrong way, you have effected the stock market.
6. Once problems arose, nervous short term traders pulled out altogether (or jumped in too soon and lost a lo of free cash) as long term investors waited till the last minute to see their stock prices go down down down when they should have sold sold sold. If you keep an investment stock for 12 months, you avoid a capital gains tax of 15% of what you make and depending on the situation, avoid the tax man a little more in April. Let's see, 15% tax or 40% loss by sitting on your hands and not freeing up money for the market which in turn, made the money in the market disappear. Then again, who would by stock in Fannie Mae when it dropped from $30 to 40 cents a share?
7. The value of the American dollar dropped, as an outcome of all of the combined and then some.
Could we have avoided it? Possible. Should we have imposed more regulations on wayward companies? That doesn't promote free capitalism but two major companies, one in India, the other under the direction of Madoff do come to mind.
Would dropping out of Iraq been a better idea? Good question. Ask a Marine. Iraqis have been liberated from the ruthless slaughtering hand of Saddam. Over 400 WMD's, including a mobile-nuclear project and mustard gas were found but were never reported for two reasons. 1. WMD's must meet a killing capacity requirement set by the UN before it is considered a weapon of mass destruction, anything under that limit is considered a backyard explosive. 2. The scare of militant Muslims in Iraq would create a second McCarthyism where we would in a panic deny the rights of nonmilitant Muslims who are peaceful and rightful US citizens. These things were not reported, as ordered by the President, so that America would be saved from itself.
Does the American presence in the Middle East serve a purpose? Yes. Insurgents, who for the most part are not Iraqi but rather Egyptian, Iranian, Syrian and so on, were being paid $3,500 to be funneled into Iraq to shoot at American soldiers (women are paid $9,000, all in oil money). So we could have a Professional Shoot Out with Militant Islam in someone else's backyard, or on a highjacked plane right in front of your doorstep. Sounds absurd, I know, but President Obama is a perfect example of one who decided, after receiving the proper info, that maybe jumping ship in the Middle East would have to be sidelined because of the influence we must maintain there.
Are the Republicans to blame or is it that things just suck for everyone? The administration should have been able to prevent such a historical calamity, correct? On the other hand, hindsight is always 20/20. You make the call.
-MIKE
...and may God bless the next man wiling to carry such a heavy burden on his back. When there is an economic downturn and no one is your friend, it's a zero or hero, chump or champ position behind that desk.
== == As a disclaimer, the following paragraph is not supported by most economists. Most economists would suggest that the Federal Reserve might have helped it along but was far from actually causing inflation. Also, the question relates to how a student of management would look at the problem of inflation, not the causes of inflation.
Inflation in the United States is a result of money management policies instituted by the Federal Reserve. This was obvious to the opponents of the Federal Reserve in the 1913 Congress. The Federal Reserve Act was passed in a rush session of Congress just before they left on Christmans break, December 13, 1913. Representative Guernsey of Maine, a Republican on the House Banking and Currency Committee, said "This is an inflation bill, the only question being the extent of the inflation." In:http://wiki.answers.com/Q/FAQ/1786 Demand side factors: 1- Increase in nominal money supply: Increase in nominal money supply without corresponding increase in output increases the aggregate demand. The higher the money supply the higher will be the inflation. 2- Increase in disposable income: When the disposable income of the people increases, their demand for goods and services also increases. 3- Expansion of Credit: When there's expansion in credit beyond the safe limits, it creates increase in money supply, which causes the increased demand for goods and services in the economy. This phenomenon is also known as 'credit-induced inflation'. 4- Deficit Financing Policy: Deficit financing raises aggregate demand in relation to the aggregate supply. This phenomenon is known as 'deficit financing-induced inflation'. 5- Black money spending: People having black money spend money lavishly, which increases the demand un-necessarily, while supply remains unchanged and prices go up. 6- Repayment of Public Debts: When government repays the internal debts it increases the money supply which pushes the aggregate demand. 7- Expansion of the Private Sector: Private sector comes with huge capitals and creates employment opportunities, resulting in increased income which furthers the increase in demand for goods and services. 8- Increasing Public Expenditures: Non developmental expenditures of government lead to raise aggregate demand which results as increased demand for factors of production and then increased prices. Supply side factors 1- Shortage of factors of production or inputs: Shortage of factors of production, i.e. raw material, labour capital etc causes the reduced production, which causes the increase in prices. 2- Industrial Disputes: When industrial disputes come to happen, i.e. trade unions resort strikes or employers decide lock outs etc the industrial production reduces. And as a short supply of goods in the market the prices go up. 3- Natural Calamities: Natural disasters, invasions, diseases etc effect the agricultural production, and shortage of supply which furthers the rise in prices. 4- Artificial Scarcities: Hoarders, black marketers and speculators etc create artificial shortage to earn more profits by keeping the prices high. (in Pakistan bird flu dilemma and sugar crises are the major examples in this regard) 5- Increase in exports (excess exports): When the country has tends to earn maximum foreign exchange and exports more and more without considering the domestic use of the commodities, it creates a shortage of commodities at home which increases the prices. (With reference to Pakistan, the failure of export bonus scheme during 1950's is the most common example of this type of cause of inflation) 6- Global factors: This factor includes the changing global environment. Most common example is the rise in oil prices. This factor of inflation may vary in nature, i.e. it can be political, strategic, economic or logistic in nature. 7- Neglecting the production of consumer goods: When the production of consumer goods is neglected with reference to the increased production of luxuries, it also creates inflation. For example in Pakistan, in last couple of years our services sector has grown with the highest rate of 8.8% (mainly telecom sector), while basic necessities have been ignored which created increase in the prices of consumer goods. 8- Application of law of diminishing returns: this law applies when the industries use old machines and methods and, which increase in cost by increasing the scale of production. This furthers the increase in prices and hence inflation bursts out.
Identify the common errors in economic thinking?
1-The post hoc fallacy
The 1st fallacy involves the inference of causality. The post hoc fallacy occurs when we assume that, because one event occurred before another event, the 1st event caused the 2nd event.
2- Failure to hold other things constant
3- The fallacy of composition
Is the price elasticity of supply usually larger in the short run or in the long run?
long
run is ever smaller than short run
Five factors aiding the booming growth of corporations included?
The five factors that encourage industrial growth include improved transportation, modern machinery, and improved communication. Two other factors are assembly line production and better production methods with modern technology.
What is the disadvantage in free trade?
Free trade is a double-edged sword. On the surface it appears as equal opportunity for everyone in the pact. While it has some advantages, it also carries some disadvantages. The extent of disadvantages for any country in the free trade zone is directly related to the attained level of technology for that country. This means that less industrialized members of a free trade region may be at a disadvantage until such countries overcome their technological obstacles.
What were Manuel Roxas' economic policies?
way of life of filipino's during the 3rd republic of the phil.
What are the effects will the US recession have on other country?
Of course it doesyer mom lol jokin. The world economy is interconnected on many levels. For instance, you may have noticed the huge jump in gas prices for a time during 2008. While there were many factors involved in this, one major one was that oil is traded in US Dollars. As the value of the USD falls, the amount of oil that $1 purchases decreases (thus increasing the price of oil). While most easily noted in countries that trade goods in the USD, the price of oil is a huge factor in the cost of moving goods around the world. If it costs more to move goods, naturally the goods cost more when they arrive.
This is a meager example of one minor facet of world economy at work. There is, without a doubt, a nearly infinite number of other examples that could be given, but I will let wiser economists than I try to give you a better explanation. However, the direct answer to your question is yes, a failing economy in the US (or any major trade nation) has a ripple effect throughout the world.
The governments world wide have been taking frantic steps to control the effects of this recession. The US government has sanctioned billions of dollars to help the economy. Similarly nations like UK, India etc are also taking steps to tide over the problem.
Currently the economic situation around the world seems to be improving and we can expect things to stabilize and become normal by the end of the year 2009.Still we have to fight.
What are the Prospects and challenges of globalization in Tanzania?
(i) Through trade liberalization and free market economy, globalization has stimulated much utilization of natural resources, there are many companies which are investing in national resources like mining ,fishing ,etc ,these companies enables Tanzania to utilize her resources for development of her people
(ii) Globalization has made production and transportation of goods easier and faster than ever before. Therefore it enable Tanzania to get different varieties of goods of various quality and quantity from any part of the world
(iii) In some instances, globalization creates employment opportunities to many people. For examples different companies such as vodacom, tigo, mining companies etc employ many Tanzanians.
(iv) Through globalization of social services, there is wide spread of private schools ,hospitals, dispensaries which contribute much in providing services to the people ,hence improving their well being
Why wasn't Lehman Brothers bailed out by the US government?
There was no one willing to buy Lehman Brothers as there were for other banks, example JP Morgan bought Bear Stearns, and when Richard Fuld, CEO for Lehman Brothers is making 60 million a year for 8 years straight (480 million to be exact) it makes the government think twice. Long story short, the government didn't have much invested in Lehman Brothers.
What triggered the 1982 economic crisis that crippled Mexico for the rest of that decade?
When the 1973 Oil Crisis hit the developed world, Mexican Presidents Luis Echeverria and Jose Lopez Portillo began to rely heavily on oil exports to support the financial needs of the country, taking advantage of the high oil prices. When the market eventually stabilized, the little diversification of exports resulted in an economic slump and a devaluation of the Peso by 500%. This is often called the Lost Decade or Decada Perdida (1973-1982). Three years later, the Mexico City Earthquake (1985) further deteriorated the Mexican economy, as Mexico City, which agglomerates 20-25% of the country's national income, was heavily hit by such natural disaster.
What caused the current banking financial crisis in the world?
A Few causes are
1. Uncontrolled Lending to customers with poor credit history
2. Too much leverage provided by complex derivative products
3. The Real estate market crash
and most importantly
GREED.
The U.S. has the most influential economy because the dollar is the standard of international exchange. A sudden contraction of the money supply ( the Federal Reserve is the only institution capable of doing this ) caused an economic crisis in the U.S. and there was a ripple effect throughout the world because so many other countries are holding U.S. dollars in their reserve.
To be quite honest without a doubt the crash of the housing market was the biggest cause.Low interest rates played a big part in dragging people in with a poor credit history who really in the eyes of the banks couldn't pay their loans off but were still given them.Also too much deregulation and the banks and business' being able to do pretty well whatver they wanted even playing with future predicted earnings on the stock market that never actually came in, also contributed in a large way to the financial collapse when companies could not afford to pay their workers and the debts that they owned to the banks and to other companies causing them to go into negative liquidity and since the banks themselves weren't lending money anymore,in many respects because they didn't have it anymore caused more and more companies and people to forfeit on their payments and debts causing a large downward spiral!
The question markets or governments are answering when they make decisions about how to efficiently convert resources in to goods and services is How to Produce? This is part of a planned economy which tries to improve productivity.
What factors will influence the supply of rice in the world market?
* change in population * government policies * income change * future expectations
What triggered this world wide recession?
The Subprime Mortgage Crisis is an ongoing economic problem that has become more apparent in 2008 and has resulted in reduced liquidity in the global credit market and also the banking & financial systems. This crisis has exposed the weakness in the global financial system and also the regulatory framework that is overlooking them. Some of the reasons for this crisis are: 1. The US Real estate market crash 2. High default rates on Subprime loans & 3. Subprime Mortgage backed securities The US Real estate market crash triggered the recession...
How did the GNP change from 2008?
How did the GNP change in 2008?tHIS IS A QUESTION THAT IS BEING ASK IN MY ECONOMICS CLASS
What is the Role of engineers in economic development?
Technology and engineering translate scientific knowledge into action. At the same time, technological innovations often require further research into materials, devices, and processes. NIFA programs support engineering research and new technology development, as well as academic training and technology transfer.
